Chapter 1: Problem and Its Background
Savings has always been an important issue for the people to consider. People usually save some money from their income after incurring necessary expenses for the future needs. The cause of saving was not under attention in the developing countries previously, so measures to ask people to save money were very difficult to be taken. But now as time is passing by, youngsters are more into saving money and realize it to be an essential part for transforming their lives more luxurious ahead. Our elders use to tell our youngsters about the importance of money savings and that’s the reason some youngsters also prefer saving for their future needs and for other entertainment purpose. But if we ask our elders and parents regarding the youngster saving habits, we generally come to know that they don’t pay attention towards savings. And to some extend it is correct. Some of the questions arise here are: Why don’t they prefer saving? Do they know the importance of saving? Do we have the right perception regarding our youngsters saving habit? In this research we will be finding out our youngsters saving habits, its reasons and its effects.
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Nowadays the youth is more aware about saving money where social media plays a vital role. Apart from this, due to the recession, parents as well encourage their children to save more and more as expenses are being incurred. Moreover, due to increasing opportunities, youngsters try to save and are well aware as to where they have to spend and where they have to stop themselves. Plus when youngsters move towards savings and are motivated towards it, so they try to adopt different ways to invest their money and for this they usually prefer to open up their bank account which also assists them to create long term relationship with the banks and become their loyal clients. This is the time when it has become our essential responsibility to know the perception of youngsters regarding money saving and what they really think about it and what makes them to save money or spend it. Here I would like to describe the meaning of perception through the definition.
According to the business dictionary website, Perception has been defined as “The process by which people translate sensory impressions into a coherent and unified view of the world around them. Though necessarily based on the incomplete and unverified information, perception is equated with reality for most practical purposes and guides human behavior in general.”1 (Business Dictionary)
Perception usually differs from person to person and also affects the behavior of a person. It could be in the favor as well as against the situation. Moreover, perception is defined as the process of interpretation and giving meaning to that interpretation by organizing it.2 (Lindsay and Norman, 1977)
From an article regarding the saving practices a person said when he was of the age 18, his parents used to advise him to save money for future from his pocket money3 .They used to bring ceramic pots for saving the cash in it. But now more and more other alternatives have been developed for saving money like UBL Young Savers Account, Bank Al Habib Young Savers Account, and Bank of Punjab Young Lions Account etc. Moreover it not only for the adults, but youngsters’ even childe of the age two can be benefited with the services of the bank to open up an account for savings.
Now a days, progressively more banks are focusing and becoming a centre of attraction in order to enlighten people to save money especially youngsters are being targeted in this regard. Different campaigns are being made for attracting the youth for awareness. Banks like ABL and HBL are among the banks that are motivating the young generation to save money.
STATEMENT OF THE PROBLEM:
The statement of the problem is to know as to what the perception of youngsters is towards savings. What they really think about it whether beneficial or not. Due to the increasing expenses can they easily save money for themselves?
The objective of my of my research is to know their money saving perception. The second objective is to know the challenges faced by them in order to save money. The third objective is to know whether they feel good and comfortable to get opportunities in saving money in the current crucial time of economic shifts.
The problems on which I have worked upon are listed below:
To know the opinions and the insights of youngsters towards savings as to what is their perception regarding it?
What are the reasons they come across that don’t let them to save money?
Does saving leads them to become materialistic or gaining power is their desire?
Can their savings provide support to the economy?
SIGNIFICANCE OF THE STUDY:
This research would really be helpful for the people who are working for the youth of Pakistan especially. Moreover, the Banks and other financial institutions can get advantage through it because these entities are now focusing youth and inviting the youth to save more and more for their future, for the country and for the humanity as a whole. Moreover, the saving schemes can also get advantage through this to know the behavior of the youth towards these campaigns. Since this research covers the perception of youngsters, related to their saving practices, so they will get to know their opinions, their requirements, their point of views and their insights towards saving.
The scope of this research is prospecting. It will help us to know the beliefs of youngsters aging from 18 to 26 years. This is the age limit for the respondent that was positioned. Many banks are now working to improve and make better educational programs for the youngsters which will affect them when they would become young adults. The reason for these programs is to create awareness among the people and to help them in establishing themselves.
While working for this research, I got to know that most of the respondents have made up their minds to go abroad and work their instead of being a part of their country and strive for it. Some of them are more inclined to depart from here and grab the opportunities to settle abroad due to having more chances to make them able and prove themselves competent.
Many of them have got negative views for saving money.
In order to have the correct balance of the sample, I came about some problems in finding the actual respondent level.
The time period was limited and the survey size was small which would have affected the results.
Some of the respondents were uncomfortable to share their information in their information in the questionnaire which also affected the results.
The results of youngsters saving perception are not totally representative. Since it contains the replies of limited people so the results are dependent on it.
Some of the delimitations of the study are s follows:
The perception of the youngsters with regard to saving may change in future
Due to access of new technology and other attractions for the youth they are likely spend money even if they plan to save it.
Youngsters: It includes youngsters aging form 18 to who have enough knowledge of how to save money.
CHAPTER # 2
Chapter 2: Research Method and Procedures
Introduction of the chapter:
Chapter two of the study starts with the research design that describes the central part of the thesis. This chapter then includes research methods which explain the nature of the study conducted, after this it includes the respondents of the study which are the people who responds to the queries asked. After this comes the research instruments which are the tools needed to conduct the research. Then the sources of data which are the means through which we can get appropriate data for the study and to get actual results.
The research design shows the type of research conducted. The type of research carried out here is causal in nature. In the causal research the relationship is proves with respect to the relationship with the variables. The reason to use this kind of research is to know the perception, behavior and insights of the youngsters towards money saving. For this certain interviews and surveys were prepared.
The study was carried out through both the primary and secondary data collection methods. The study conducted was causal research. From the primary data collection method, quantitative and qualitative study was conducted to present in the numeric form on the basis of opinions and survey conducted through the questionnaire from the respondents. As far as secondary method is concerned, internet and other publications were used to complete the study.
Respondents of the study:
The primary respondents of the study were the young adults who filled the questionnaire to let us know their opinions and perceptions and apart from this, the interviews conducted from bank managers also come under our primary respondents.
Moreover, I did conduct one in-depth interview. It was conducted in such a manner that the six people were in the group having the age bracket between the ages 18 to 26. They discussed their issues and perceptions in detail.
Random sampling was done among the young adults under the age bracket of 18 to 26 years of age. The respondents could be from high school, college, university or any other level. The main reason to select this age is to know their money saving perception and to know what their opinion is regarding different factors that motivate them to save money. A total of 105 respondents were taken on to account for the survey. The sample size was 105.
The research instruments are basically the tools needed to conduct the study which eventually helps the researcher to get the prior and appropriate data according to his or her preferences. The tool used in this study is the usage of a questionnaire which was filled up by the respondent who was maximum the age limit required.
Sources of data:
In order to complete the study the data requirement was one of the main constraints. So for the completion I had to conduct survey from the youngsters aging 18 to 26. Moreover, different articles, books and internet links were the sources of data. Apart from this interviews from different individuals were carried out.
Treatment of data:
The data collection was analyzed through the statistical tool of SPSS. Along with this bar charts and graphs are used to clearly discover the differences.
CHAPTER # 3
Chapter Three: Review of Related Literature and Review
INTRODUCTION OF THE CHAPTER:
In this chapter, review of all the related writings is considered. Here these writings are summarized and explained. In this chapter, local and foreign literature is included. In the local literature, reviews of the writers are written along with the sources from where they have been extracted which belongs to the local writers. In the foreign literature, reviews are added of the foreign writers.
It contains the reviews and other theories that supports the topic and tell about the pros and cons of the study through the research conducted by the researchers previously.
“Money, money, money – how do attitudes toward money impact vanity and materialism? – the case of young Chinese consumers” 4
A study was conducted in China among the young and the main reason to conduct the research was to know their perception regarding the money and what are the main factors that led them to save money. It is very important now to know the perception of the youth because it helps he strategists and other marketers to shape strategies for them to help them get the best out of life and provide opportunities to them by providing a platform.
Through this research paper the author wanted to know the increased materialism among the youth of China. The factors outlined in the research paper were power and prestige, anxiety and distrust. These are some of the motivational factors that motivate the youth to save money. It stimulates them and encourages them to think about money saving.
The power and prestige factor explains that the youth save money and would like to have it because it provides them a sense of authority and they feel reputed and classy. The other factor is the anxiety factor that relates that people who don’t have enough to spend money but even then they go for purchases in order to reduce their worries. They do shopping and spend their money which provides them a feeling of relief and leisure. The distrust factor explains that they are cautious when are asked to spend money for different purchases. They think several times to spend their wealth.
As time is passing by the possession to keep the money among Chinese youth is increasing rapidly. They usually see the high class status people and learn from them that they should also acquire money because through having money and saving it, they would be regarded as powerful and role models for others.
Apart form this recent studies show that a new subculture is emerging in China by the name of Bobo which indicates that people save money and acquire it only to become an icon which reflects their personality and where they can attain the luxuries of life easily. The Chinese youth is becoming more and more materialistic in the sense that due to modern era and coming up of new attractions in the society motivate the youth to have money and then acquire things they want. They think that if they will have enough money to spend then they would be able to purchase things of their interests. Moreover in the past, the perception was not have money for spending it on the luxuries of life but now the trend ha changed and they feel good when they spend their money on the means that make them feel happier.
Apart from this other attractions to get money and save it is though the credit cards and loans provided. Different promotional campaigns can help the youth to be taught the importance of saving and having money which can assist them to take active and strong decisions as to where and how to spend their money and how they can save it for different situations.4
4Srinivas Durvasula, Steven Lysonski, (2010),”Money, money, money – how do attitudes toward money impact vanity and materialism? – the case of young Chinese consumers”, Journal of Consumer Marketing, Vol. 27 Iss: 2 pp. 169 – 179
According to Berti & Bombi, Human Development theory states that:
“Children start saving money when they grow and progress. When they get the awareness and identify the advantages provided by saving money they gradually begin to save more and more. Moreover, during their growth stage, they come across biological, psychological and cognitive stages that let them learn to save, which helps them to get the clear concept of saving money”5 (Berti & Bombi, 1988 ; Strauss, 1952)
“Saving for the Future- Trends, Patterns and Decision-Making Processes among Young Americans”6
The personal savings rate has been dilapidated very rapidly in the U.S. Due to the recessionary period, the situation is becoming worse day by day. People there are in debts and it has become very difficult for them to pay off. Because of this, now extreme attention is being given to the young generation of US. They are being encouraged to save money and accumulate it for their bright future. One of the main costs is for the expenses incurred by the college tuitions.
The financial highlights previews that it has now become very difficult for the people to cope up with financial catastrophe around. Some years back, people used to save money mainly to fulfill their necessities, but now the trend is changing. Apart from this much other responsibilities have emerged that include the repayment of credit card bills, tuition fees etc. But people can’t help themselves to swallow this bitter truth that whatsoever be the result, they have to undergo through such period where there is so much of difficulty and complications.
Keeping in mind the existent trend, the young generation should be aware of the consequences and should get a lesson from it. They should be taught to save money for their present and ultimately future for a better and enhanced outlook of life.
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In this piece of the literature, it points out to the three main objectives for conducting the research. Firstly the form of the savings done by the young adults, secondly how do they do it, and thirdly, what policies could be implemented for the young adults to help them understand the financial knowledge and encourage them to save more money.
According to some of the findings, it was seen that young adults are more into debt than the income they get. The reason for this is the attractions that let them to spend money. They focus on their wants additionally rather than controlling themselves to spend money. They have little control over things to spend money on. It was also found that the young adults had to go through the decision making process where they have experience the five phases of decision making. As time passes by, the need of these young adults arises which inquires for more accounts to buildup their portfolio. The vigor to have more money and accounts for it remains same, but as time surpasses the characteristics or the performance progresses.
According to this literature it states that, many of the facts are available from those young adults who have already saved money, but there is no or less data available of young adults that show the challenges they face when thy have to do the money savings.
In order to educate the young adults’ proper training should be provided to them and it is very important at this point in time. It would require uphill effort to instruct them. The larger entity and other financial bodies should pay attention to it to provide counseling to the young adult and to encourage them to save money for their better future.
6Sarah Outcault, (June 2012); “Saving for the Future- Trends, Patterns and Decision-Making Processes among Young Americans”, Pardee RAND Graduate School
“Testing an Asset-Building Approach for Young People-Early Access to Savings Predicts Later Savings”7
The literature includes three parts. Firstly it includes the young people’s saving behavior towards the asset management practice. Young people are less knowledgeable regarding the strategies promoted for enhancing the asset management. Second part of the literature talk about the behavior of young people savings with regard to the models and concepts presented by the authors earlier. Mainly the neo classical theory, economic socialization theory and institutional models are quoted. Third part of the literature proves whether the money saving practices adopted by the parents in the adolescent brings out better results or when the money saving programs are in touched later in life or when time in need. For the most part the low income household’s behavior was analyzed.
Economic socialization theory talks about that if parents teach their children the money saving pattern, then eventually by their warmth and attention the children would be benefited in the later stages of life. They will have more information, more benefit and more opportunities. If parental attention towards letting child save money by giving them allowances and becoming a role model or an example for them, then they will also adopt the behavior parents commit which will eventually help them shaping their lives. It is stated that if young adults are taught to save money from their younger ages, it would not only improve their habit of saving but they will also be aware of the financial information and other concepts and programs that can help them save money for their future. Institutional model relates that if young people are made conscious of the external facilities at the earlier stages of life like money saving programs, services and products then they will also become good decision makers of their future.
From the literature it was sorted out that young adults, who are emotionally involved with their parents with regard to adoption of money saving behavior, are more experienced and know the inns and outs of it. Apart from this asset management techniques are also well learnt by those young adults whose parents are involved in it and explain to their children about it. Young adults having saving accounts can accumulate more wealth when they have appropriate knowledge about it and other products and programs if transferred to them accordingly can bring a positive impact for them.
7Terri Friedline, William Elliott, Gina Chowa, (2012), Testing an Asset-Building Approach for Young People-Early Access to Savings Predicts Later Savings, George Warren Brown School of Social Work, Washington University in St. Louis, CSD Working Papers No. 12-12
“Contributions of Qualitative Research to Understanding Saving Theory for Children and Youth” 8
U.S and world is paying more attention towards Asset-Based programs. The main purpose of these programs is to encourage financial security and to offer positive effects throughout the life of person. But very little or no attention was paid towards children’s saving and the effects of saving for youth and children in this regard.
There are many reasons of the importance of asset accumulation for children. Some of the reasons include the saving in childhood is of longer period of time which can be invested as well as can provide greater financial return even if the amount is smaller and these returns are likely to help the children in their education as the cost of tertiary education have increased and shifted to parents and students. Second, the process of asset accumulation in early childhood helps in child development. Third, these practices not only help the children to understand complex financial knowledge and skills but also shape their money management skills. Above all it provides the security for their future needs especially educational needs.
There are several theories that provide insights on process and effects of money savings on children. These theories include human development, structural approach, socialization, behavioral economics, and institutional theory.
According to the development theory young children are capable of understanding and know that saving is beneficial for them.
Children’s cognitive abilities, increases during transitory period from childhood to adulthood but socialization increases form exposure and encouragement to gain knowledge about the financial world.
Moreover behavioral economist suggests that vigilant design of financial services and products can increase the chances of making good financial choices regardless of individual characteristics.
This paper sheds the light on how children saving are being affected by these theories and examines the evidence to understand the effect and relationship between children’s age and economic socialization.
This article’s aim was to contribute to saving theory for youth and children by using qualitative studies of three different Child Development Accounts. These accounts provide the opportunity to accumulate savings for the benefit of child. These accounts include, I Can Save a college saving program in school for elementary age children, Opportunity Passport program which provides incentivized saving account, and SEED for Oklahoma Kids, a randomize experiment of incentivized saving plan for children at birth.
1st study explored that most of the children who participated in ICS program belong to the families whose average educational level was 11th grade and reported family income were below $25000 despite the fact that the school where the research took place was racially and economically diverse.
2nd program study (Opportunity Passport) was developed by Jim Casey Youth Opportunities (JCYO) a part of JCYO Initiatives 2009 program for whole country. The participants of this study had received training in financial literacy and upon completion of training, they were provided with an Individual Development Account and a Checking Account. The participants were aged14-24 years and vary from site by site among all four sites.
The 3rd study was the large-scale study of universal Child Development Account with randomly selected babies born in Oklahoma in 2007 an experiment known as “The Seed for Oklahoma Kid (SEED OK)”. This study also reveals that most of the families who save more were having a reported income of less than $30,000 and were African Americans.
All these three studies had common theme and differences and paying particular attention we could learn about savings of different age of people. Moreover these studies can also provide the insights of how people of different age group think about saving.
The ability of participants was affected by circumstances and individual characteristics as described in three studies. Their savings abilities were also affected by some institutional factors. Individual level factors reveal that ICS participants had very low understanding of financial matters because of their elementary age but they were excited about learning it whereas in OP most of the participants had better understanding of money as compare to younger children. Despite having limited income they were engage in much higher level of saving participation for their future needs.
On the contrary, looking back to their childhood, younger children in OP and mothers in SEED OK had not learn about how to save during their transitional age towards adulthood. And because of that in OP young children had receive no or little guidance in money management and savings from their families.
Although the participants and their families learnt about saving and money management during those studies but they also identified some obstacle to saving. These obstacles include low income, high expenses, and low support in all three studies. Moreover they also identified some institutional factors as bad experience with financial institutions which also hindered them to save.
These studies found that the participant appreciated the incentives given to them for savings and had influenced them to save more and pay attention towards money management. Moreover the restricted access to their accounts forced them to save although they didn’t like it. That means incentives can take youth and their families towards saving.
Effects Of Saving
The participants of all three studies discussed their perceived effect of savings on their lives. In all three studies participants positively accepted savings but it can be tempered according to their need and desire. Some of the effects they discussed include enhanced understanding of saving services and product and its use, Savings provides positive vision of future and sense of security, improved financial skills and knowledge as they received training of financial skills and money management during Opportunity Passport program. Moreover participant provided improved understanding between future education and savings. They used their IDA accounts to pay their educational expenses or to purchase attainable assets (e.g. Laptops etc.)
These studies show that some program features have greater impact on savings depending on development stage and age group. Foster youth perceived it more positively than other groups as they face greater challenges as, higher poverty, more prior negative banking experience tenuous relationship with family. They appreciate the financial boost provided by OP program. But at the same time they required more guidance about saving and money management and the restrictions helped them to understand development task and importance of accumulation some saving. Study showed that they need more ways to generate money to deposit in to CDAs.
The U.S. internationally has never been quicker in moving towards electronic and cell-phone based financial services. Moving towards it and making innovation in it may encourage youth and children to save more. Moreover, children and youth should pay more attention in accordance with their development stage. Saving campaign and information can be designed in a way that appeals particular age groups.
As OP youth and mother of toddlers in SEED OK articulated frustration and difficulties in meeting immediate expenses programs shall be made to overcome these obstacles.
8Margaret Sherraden , Clark Peters, Kristen Wagner , Margaret Clancy , Baorong Guo (2012)- “Contributions of Qualitative Research to Understanding Saving Theory for Children and Youth” , University of Kansas School of Social Welfare and the Center for Social Development at the George Warren Brown School of Social Work, Washington University in St. Louis, CSD Working Papers No. 12-23
Areas further studies:
The areas of further studies are to know that whether youngsters will be motivated if they would be provided with some educational campaigns regarding it. Will they save money for there futures keeping in mind the crucial economic downturns? They should help the country as well by saving money and investing it in areas where the country get benefit as well the person himself.
Income level, economic shift, prom campaigns
Purchasing power, word of mouth,
Youngsters who save money learn more patience
Youngsters who save money for their education
Youngsters get the motivation to save the money from their parents
Among youngsters’ reasons for saving less money are increased expenses
Youngsters feel that in the current economic situation they can get more opportunities to save money
youngsters who think saving money is beneficial
INSTAED OF BRANSHCES, MAKE A SECTIONFOR TAREGTING THE YOUNSGTERS AND PROMOTE THEM TO CREATE AEARENESâ€¦ THEY SHOULD GO TO C=SCHOOLS, UNI CONDUT ROAD SHOWS. TEACH THEM HOW TO SAVE FROM EARLY SATGESâ€¦ TEACH THEM HOW TO COPE WITH THE RECESSIONARY PERIOD. AND HOW TO MAKE BUGET AND MAKE FINANCIAL.THIS WILL HELP THEM TO BE INDEPENEN. THORUGH THIS THEIR COMMUNICATIIN SKILLLS WOULD ALSO INCREASE.
THERE IS S MUCH POENTIAL AMONG YUNGSTERS, BUT SINCE NO PROPER PLAFORM IS BEING PROVIDE TO THEM SO THEY ARE EFT BEHIND. IT S ENGROSSED WITH THE TALENT. THEY SSHOULD BE MOTIVATED AND ENCOURAGED.